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There are many implications in altering penalty rates, according to a professor of employment relations

The Fair Work Commission has rejected a 7-Eleven pay deal because it would have left workers around $80 out of pocket each week.

The proposed enterprise agreement by a Sydney 7-Eleven franchise has failed the commission’s “Better off Overall” or BOOT test, because it was deemed employees would earn less than they would under standard award wage rates, Fairfax Media reported.

Patricia Ryan from The Workplace Lawyers says the Commissioner required the franchise, trading as 7-Eleven Bexley and 7-Eleven Rozelle, to demonstrate that proposed weekend rates would adequately compensate for potential loss of award entitlements.

“The BOOT test states that the employees must be better off under the EA on an overall basis when compared with the rates in the applicable modern award (the award that would otherwise cover the employees),” Ryan told HC Online.

“The rates do not need to be the same – for example, an EA may have a 20% Saturday penalty instead of 25%, provided the base rate between Monday and Friday is higher than the base rate under the award to compensate,” Ryan says.

She said the commission would determine whether the monetary amounts in proposed enterprise agreements meet the “Better off Overall” test when compared to what employees would earn under the applicable modern award.

Ryan says HR managers drafting enterprise agreements need to be able to demonstrate that the proposed rates meet the BOOT and when told the rates don’t meet the BOOT, provide satisfactory explanations as to how it does or provide undertakings which effectively amend the agreement.

She also said wage audit mechanisms need to be employer directed and should not rely on an employee to request one.

Commissioner Roe said the salary proposal failed the 'better off overall' test and the employer should be responsible for determining any shortfall in wages.

The company was criticized for exempting itself from paying wage shortfalls if employees had requested particular rosters and for failing to restrict the amount of weekend work required of employees to a reasonable proportion of their total weekly hours, the SMH reported.

Commissioner Julius Roe has advised the company in December to make further submissions responding to his concerns.
"Further submissions were received from the applicant but I was not satisfied that the loaded hourly rates were sufficient to ensure that employees who worked a considerable proportion of their working hours on weekends would be better off overall," he told the SMH.
"If an employee is unaware that they have received less than the award and or fails to make a request to the employer for a reconciliation, then they will not be better off overall," he was quoted saying.

"Furthermore, it is a matter for the employer to determine if there is any shortfall. How this calculation is to be made and what factors are to be included is not specified.”
Commissioner Roe concluded that the application was dismissed because the company failed to provide acceptable undertakings to remedy these issues.

Ryan said some key considerations for HR professionals drafting new enterprise agreements include:

The agreement will not be approved if it does not meet the BOOT;

The agreement should clearly provide for how any mechanism will work

Safeguards should be included where there are “flat” wage structures - the same hourly rates across all days and times to ensure the rates will met the BOOT over typical roster patterns

There is a lot of time and effort that goes into the process – be prepared to commit to this to get it right.

As well as meeting the BOOT, agreements must contain mandatory clauses regarding consultation, flexibility and dispute resolution and must not contain any discriminatory clauses